Meritz F&M 3Q. FY2010 Financial Results

Transcription

1 0 Meritz F&M 3Q. FY2010 Financial Results

2 Disclaimer 1 This material has been prepared based on internally audited figures and final figures may change due to the results of an independent audit without notice. This presentation includes forwardlooking statements regarding the company s outlook for FY2010 and beyond, including projected premium and net income. These forecasts are subject to unknown risks and uncertainties that may cause actual figures to differ from those stated or implied by such statements. We have no obligation or responsibility regarding investment made based on such forwardlooking statements.

3 Contents 2 1 About Meritz F&M 2 3Q.FY2010 Review 3 Meritz Financial Group Transition Appendix 3Q.FY2010 Financial Results FY2009 Embedded Value

4 History 3 Second rebirth (2005~ ) Era of Growth (1983~2004) Total assets exceeded W7t Total Invested Assets exceeded W5t Acquisition of Meritz Business Service (MBS) as subsidiary Founding of Meritz Securities (Merger of Meritz Securities and Meritz Investment Bank) Founding of Ritz Partners (Sales Subsidiary) Founding of Meritz Asset Management Founding of Meritz Financial Information Service Share offering (W225.7b) Acquisition of Meritz Investment Bank as subsidiary Stock split 10:1 (W5,000 W500) Acquisition of Meritz Securities as subsidiary Rechristened Meritz Fire & Marine Insurance, Head office relocated to new building in Kangnam Disaffiliates from Hanjin Group Total assets exceed W1t Head office relocated to Yeoido Rebirth (1950~1982) Sales exceed W10b, a first among Korean insurers Hanjin Group acquires Oriental Fire & Marine Insurance IPO on KSE, becoming Korea s first listed insurer Rechristened Oriental Fire & Marine Insurance Era of foundation & exploration (1922~1949) Founding of Chosun Fire & Marine Insurance (Korea s first nonlife insurance company)

5 Shareholders Structure 4 Major Shareholder s stake: 21.6% Jungho Cho : 21.4% (26,500,725 shares) etc Freefloat : 59.8 % Foreign investors : 12.0%, domestic : 47.8% Major shareholders: :KB Asset management 9.2%, NPS 9.1% Shareholders ( ) Affiliates Major shareholders Domestic 21.6% 47.8% 3.0% ESOP 30.71% 100% 100% 100% 100% Foreigners 12.0% 13.0% 2.6% Related companies Treasury Meritz Securities Meritz Asset Management Meritz Financial Service Ritz Partners Meritz Business Service

6 Share Price Performance 5 Meritz, Industry, KOSPI Performances ( ~ ) Meritz KOSPI Industry Top 4 avg Meritz 139.6% Top % KOSPI 124.6% 100.0% Industry 100.7% 12/30 3/4 5/7 7/10 9/12 11/15 1/18 (Unit: won, x) Adj EPS ,244 1,079 Adj PER Adj BPS 4,575 4,864 4,293 6,457 7,757 Adj PBR

7 Dividends 6 [Dividend History] The first insurance company to pay an interim dividend (Sep 2007) Dividend Net income Dividend ratio Payout ratio FY05 W 100 W 26.4 bn 2.4% 29.6% FY06 W100 W 35.8 bn 1.4% 22.2% Interim W 100 (11.8 bn) W 56.9 bn 1.1% 20.7% FY07 Yearend W 125 (14.2 bn) W 71.1 bn 1.4% 20.0% Total W 225 (26.0 bn) W 71.1 bn 2.5% 36.6% Interim W 50 (5.3 bn) W 42.3 bn 0.6% 12.6% FY08 Yearend W 58.8 bn Total W 50 (5.3 bn) W 58.8 bn 0.6% Interim W 71.5 bn FY09 Yearend W 300 (32.0 bn) W bn 4.0% 22.8% Total W 300 (32.0 bn) W bn 4.0% 22.8% Note: Implemented 10:1 stock split in Feb 2006 [FY09 Industry Dividend] Samsung Hyundai Dongbu LIG Payout ratio 24.9% 30.5% 19.8% 21.1% Dividend yield 1.6% 3.7% 2.3% 2.7%

8 Our Management 7 Chairman: Jung Ho Cho Chairman of Meritz Insurance since 2003 Chairman & CEO of Meritz Securities (2003) Vice Chairman & CEO of Hanjin Securities (1999) Swiss International Institute for Management Development (MBA) Vice Chairman & CEO: Myung Soo Michael Wohn CEO since June 2005 Chief Operations Officer at PCA Life Chief Information Officer at Samsung Fire & Marine 26 yrs of experience at US P&C insurers (General Accident, Harleysville Insurance Group) CFO: Jin Kyu Song CFO of Meritz Insurance since May 2005, head of strategic planning division Current member of Korean Actuarial Association More than 20 years in the nonlife insurance industry Actuary and risk management manager of Samsung Fire & Marine (2005)

9 Contents 8 11 About Meritz F&M 2 3Q.FY2010 Financial Results 3 Meritz Financial Group Transition Appendix 3Q.FY2010 Financial Results FY2009 Embedded Value

10 Overview (Industry leader in average annual profit ) 9 [Net Profit] Net Profit 26.4 bn 35.6% 35.8 bn 98.6% 71.1 bn 40.1% 99.6 bn w/out Unusual factors 41.0% bn 91.2 bn FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010 FY2008 Unusual factors: RG loss : bn / bad investments writeoff : 60.2 bn / additional DAC amortization : 30.2bn 58.8 bn (Unit: KRW Bn) FY2005 FY2006 FY2007 FY2008 FY2009 3Q. FY2010 Direct premium 1, , , , , ,867.3 U/W Profit Combined Ratio 106.3% 105.4% 102.8% 108.7% 100.1% 102.4% Net investment profit Investment Yield 6.4% 5.9% 5.6% 2.8% 4.9% 5.1% Net Profit Adj Net Profit Adj ROE 12.0% 13.7% 18.6% 16.1% 26.2% 16.1% Solvency Ratio (RBC Ratio) 193.2% 170.4% 235.8% 189.9% 230.9% (269.7%) 260.6% (292.3%)

11 FY2005 FY2006 FY2007 FY2008 FY2009 3Q. FY10 LT New Premium & Sales Portfolio (#1 leader in LT mix & Protectiontype Mix ) 10 Maintain Protectiontype type driven sales Direct Prem Mix Comm Auto L T FY Meritz Top % 12.8% 12.6% 12.2% 11.7% 11.3% 11.0% 11.9% 9.8% 10.4% 8.4% 10.6% 30.8% 27.0% 25.1% 21.0% 20.4% 33.8% 32.4% 31.7% 29.3% 26.7% 25.2% 34.0% 49.6% 56.6% 61.3% 63.9% 69.2% 71.2% 55.4% 57.0% 58.8% 62.9% 64.2% 53.4% FY2005 FY2005 FY2006 FY2006 FY2007 FY2007 FY2008 FY2008 FY2009 FY2009 3Q.FY2010 LT New Premium Protection mix Meritz 80.7% 83.6% 85.8% 83.3% 76.7% 65.2% Top 4 LT New Premium Protection M/S Meritz 78.1% 9.1% 72.0% 70.2% 70.4% 60.0% 47.2% 10.2% 11.4% 10.6% 10.7% 10.5% FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010 Note1) LT Protection New Premium M/S and Mix : Excludes 1 time payment

12 Issue: Recent Longterm Protectiontype type new premium growth 11 Meritz recovery of protectiontype new premium as of September 2010 and will turnover to growth in FY2011 Protectiontype New Premium Premium (KRW Mn) Protection Mix 5, % 4,146 4,449 5,263 4, % 78.1% 67.4% M/S 61.1% 12.1% 10.7% 10.7% 10.8% 10.2% 5.5% 0.8% 8.9% 8.6% 38.9% FY2009 1H.FY Note1) FY2009, 1H.FY2010 is monthly average, Oct~Dec is based on each month

13 Underwriting Profit (#1 in L/R and #2 in C/R) 12 Combined Ratio Meritz Top 4 Avg Loss Ratio 106.3% 105.4% 103.3% 103.8% 102.8% 100.7% 108.7% 100.9% 101.3% 100.1% 103.0% 102.4% Meritz Top 4 Avg 81.9% 81.7% 81.5% 81.1% 78.9% 78.5% 82.5% 76.7% 78.6% 75.4% 81.4% 79.7% Expense Ratio Meritz Top 4 Avg 24.4% 24.3% 23.9% 21.6% 22.3% 22.2% 26.2% 24.2% 24.7% 22.7% 22.6% 21.6% Administrative Ratio Meritz Top 4 Avg 14.4% 13.0% 12.4% 12.7% 12.1% 12.0% 11.9% 11.9% 11.9% 11.2% 10.7% 10.7% Note) General Expense ratio : Expense Ratio Selling cost ratio FY2005 FY2006 FY2007 FY2008 FY2009 3Q. FY2010

14 U/W Profit (#1 leader in efficiency of Long Term line) 13 LongTerm New Premium Mix Protectiontype monthly payment Meritz 63.4% A 43.3% B 48.9% C 47.2% D 45.9% Top 4 Avg 45.7% Industry Avg 47.8% Protectiontype 65.2% 45.7% 49.7% 47.4% 47.2% 47.2% 49.2% Savingstype 34.8% 54.3% 50.3% 52.6% 52.8% 52.8% 50.8% Note) LongTerm New Premium Mix : Excluding onetime payment #1 L/R in industry #1 C/R in industry 89.6% 88.8% 86.6% 107.0% 85.0% 84.4% 82.4% 82.2% 83.3% 104.4% 103.6% 103.7% 101.5% 103.4% 101.3% 100.5% 82.5% 101.3% 101.2% Meritz Top 4 Meritz Top % 77.5% 80.0% Meritz Top % 98.4% FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010 FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010

15 Issue : Auto L/R 14 Auto L/R & Accident Ratio 75.5% 77.6% 69.9% L/R 27.7% 25.7% Accident ratio 22.7% 22,040 21,874 # of Accidents 19, % 84.7% 86.0% 90.2% 28.4% 28.9% 31.2% 29.1% 22,815 23,547 24,162 26,380 FY2008 FY2009 1H.FY2010 3Q.FY Note1) Accident ratio = # of accidents/valid automobiles. Increased # of auto accidents since diversification of Premium standard ($500 Max $ 2,000) in Jan 2010 Note2) The figures of OctDec are based on each month Countermeasure for Auto Insurance Classification Contents Effective Date Improvement Switch to Proportional deductible From fixed amount ($50) variable rate (20% of loss amount) Expand discount rate for noaccident driver Current min discount rate 40% 30% Reform traffic violations surcharge system Surcharge only people with penalties Expand to people with fines L/R 1.9%p Rationalize rent car price Rent with domestic cars for the accidents with imported cars Q Develop product for lowincomes (Decrease price for small cars) 10yrs or more/10% premium discount for below 1,600cc Sales cost limit ) * : 50 / 10% Limit Expectation Expense to 40% E/R 2.1%p C/R 4.0%p

16 Issue: Continually Expanding living benefit N/G Mix Continually expanding Life NonGuaranteed Mix Risk Premium Mix Property, etc Death Living Benefit NonGuaranteed Living Benefit Guaranteed Risk L/R by each mix Death LB guaranteed Total Property and etc LB nonguaranteed 15 (Unit : %) 23.5% 20.7% 18.7% 17.8% 17.5% 17.8% % 28.2% 26.6% 24.5% 22.3% 22.1% % 16.3% 22.1% 27.8% 33.5% 35.7% % 34.9% 32.6% 29.9% 26.7% 24.5% FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010 3Q.FY2010 FY05 FY06 FY07 FY08 FY09 FY10.12월 NonGuaranteed coverage renewal initiated in Oct 2010 ( 5 yr (sold in 2004), 3 yr (sold in 2007) ) Increase of renewal policy effect : FY %, FY %,, FY %

17 Channel 16 [Channel Mix] Exclusive Channel Employed sales FC TC Exclusive for commercial line corporate clients 72 Financial consultant 4,238 Total consultant 3,312 [New contract premium portfolio by channel] 24.4% 28.9% 29.1% 28.1% 25.9% 24.5% 12.2% 18.6% 44.8% 14.6% 17.0% 19.2% 22.4% 23.6% 34.0% 30.3% 18.9% 19.3% 31.0% 34.9% 33.3% 21.7% 20.3% 22.8% FC TC GA Others Inforce biz Profit margin 9.8% 10.4% 8.2% 5.8% Others Traditional sales force 2,224 FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010 Note) Inforce biz profit margin : Based on FY2009 EV [Sales force qualification exam market share] Total 8.5% Common channel Bancassurance GA (independent general agency) 16 banks 6,018 branches 1,244 agencies About 70,000 employees 8.8% 9.4% 13.8% 11.2% 9.0% 9.8% Multichannel, Newchannel Homeshopping, crossselling, online direct, etc. FY2005 FY2006 FY2007 FY2008 FY2009 3Q.FY2010

18 Investment Portfolio (Focused on fixedincome income asset) 17 Total Assets exceeded W 7 Trillion, Investment Assets W 5 Trillion, 5.1% Yield (Unit: W bn) Mix Mix Mix Profit Yield Fixedincome asset 2, % 3, % 3, % 18.1% % Performancebased asset % % % 23.5% % Stocktype asset % % % 34.9% % Other % % % 74.5% % Subtotal 3, % 3, % 4, % 20.4% % Equitymethod & real estate % % Total investment asset 4, , , % % Total Asset 5, , , % Note) Fixed income = deposit, AFS bond, overseas bond, loan / performance based = trading bond, alternative investment / Stock = outsourced investment, trading stock, stocktype AI / Other = Nonoperating deposit, Property management fees

19 Risk & Return Balance (#2 in Solvency Ratio & Adj ROE) 18 Adj ROE Meritz Adj ROE : 26.2% FY09 Solvency Ratio: 230.9% 2 nd Tiers TARGET ZONE 15% FY08 Adj ROE : 19.4% Solvency Ratio : 192.3% FY09 Adj ROE : 21.0% Solvency Ratio : 217.0% Dec FY10 Adj ROE : 16.1% Solvency Ratio : 260.0% Dec FY10 (RBC 291.6%) Adj ROE : 12.5% Solvency Ratio : 233.3% FY08 Adj ROE : 9.2% Solvency Ratio : 189.9% 200% Note) Meritz FY2008 Adj ROE: Not reflecting RG Loss Solvency Ratio

20 Contents About Meritz F&M 2 3Q.FY2010 Financial Results 3 Meritz Financial Group Transition Appendix (3Q.FY2010 Financial Results) 3Q.FY2010 Financial Results FY2009 Embedded Value

21 Necessity of Financial Group Transition 20 (1) The need to create synergy to secure revenuebased business and maintain stable market position under the current group business line In order to overcome weaknesses each affiliates under Meritz group, the creation plan of recapitalization and synergy consolidation is in need to raise the necessary conditions Comparison with other industry Nonlife Insurance M/S Share s equity Assets Meritz 8.3% ,035.0 (Unit : KRW bn) Top 4 Avg 18.1% 1, ,523.9 GAP 9.9% 1, ,488.9 Securities Asset Management M/S Share s Share s Assets M/S equity equity Assets 1.3% , % % 2, , % % 1, , % (Source: Financial Statistic Information, FY09 Public data,) (2) Need of diversification of financial business to provide comprehensive financial service Enhance customer s loyalty through onestop comprehensive financial service In order to secure new engines for sustainable growth of the group, diversification of financial business is needed Function of financial service and business line Payment Function of Financial service Financial Derivative Trust Loan Asset Management Nonlife Financial Asset InvestmentManagement Exclusive Sales Operating Businesses Deposit Variable Insurance Credit Information Consulting Securities Operating Assets Foreign Exchange Research Insurance Bank Life Insurance Savings Bank Loan Credit Information NonOperating Businesses

22 Necessity of Financial Group Transition 21 [Reference] Meritz Group Financial Information (W Bn) F&M Securities Asset Management Financial Information Ritz Partners FY2009 3Q.FY10 FY2009 3Q.FY10 FY2009 3Q.FY10 FY2009 3Q.FY10 FY2009 3Q.FY10 Assets 6, , , , Liability 5, , , , Share s Equity Capital Net income

23 Necessity of Financial Group Transition 22 (3) Need of proactive measure for division of manufacturing and sales of financial products In order to proactively respond to introduction of exclusive sales company for the sales of comprehensive financial products and development of Integratedtype channel, It needs to strengthen the competitiveness of the group s sales company. Financial holding company structure will enable to share customer DB which will help sales company to grow. (4) Capital finance and Investment capacity There is limit to provide comprehensive financial service as the amounts of investment affordability under the current corporate governance are KRW130 bn ~ 180 bn. Corporate governance and investment affordability Bank Card Non Life Life Financial Investment Loan Asset... Management Investment Capacity 130~180 bn Major shareholder Exclusive Sales Company 21.4% Meritz Fire Total Investment affordability : KRW181.0bn Amount invested : KRW143.1 bn (invested to subsidiaries) Remaining amount to invest : KRW 37.9bn Individual Corp Customer Customer... VIP 30.5% 100% 100% 100% 100% Insurance Channel development followed by diversification Securities Asset Management Financial Information serv Ritz Partners Meritz Business Service Traditional channel Solicitors/ Traditional Channel New Sales Channel Open type Channel Home Shopping GA Direct sales (Independent) (TM/internet/ Credit card/mail) banc assurance Integrated Channel Exclusive Insurance sales channel Investment affordability KRW100 bn ~ 150 bn No affordability to invest (Based on Sept2010, excluding foreign subsidiaries and grandson companies) Meritz Securities' special account equity not included (0.2%)

24 Necessity of Financial Group Transition 23 (5) Need to structure an independent management system and to prevent subsidiary's risk diffusion Despite F&M performances, business performance based on subsidiary can expose F&M financial performance to decline due to current governance where F&M directly invest to subsidiaries, hence in need for governance transition to protect policyholders. Shareholders and subsidiary s customers are concerned about losing confidence in independent management of the businesses under current structure where F&M is directing variety of businesses that has different type of products, channels and type of risk (6) Provide Business efficiency for financial group Provide business efficiency for group restructuring, expansion of new businesses strategic role prevent risk, trimming down overlapping resources managing role Strengthening business through customers, channels, products operating role Need Control Tower Provide efficiency through focusing on core competence F&M Securities Asset Management Ritz Partners Financial InfoService Business Service Improvement of management efficiency by integrating the common roles to relevant subsidiaries while each company focusing on core competence Holding company Brand management Common Function Brand mgmt/pr/ir system mgmt / data maintenance purchasing building lease/maintenance/administrative cost customer serv (call center) wage/big 4 insurance/yrend settlement HR/support/education legal serv / bond followup control inflow mortgage accting/ ledger mgmt / expense process Shared Service Center Customer service (call center) maintenance, exclusive management company Building lease, facility management Maintenance, purchasing, etc

25 Transition method 24 (1) Transition Method and Structure Splitting part of Meritz F&M subsidiary s stocks, Treasury and part of cash assets to establish Holding Company. After IPO, Holding Company will buy Meritz F&M s shares through tender offer to meet shareholders requirements for holding company (listed 30%, nonlisted 50%) 1 st step : Meritz F&M Investment Division Split 2 nd step : Tender offer for Meritz F&M Exception Hanjin Korindo 51% F&M Major 21.4% Shareholder 21.4% + Investment in kind s exchange shares 21.4% Securities 30.5 % 100% 100% 100% Asset Management 100% Financial Information Ritz Partners Treasury(13.0%), part of cash asset Meritz Business Service Major Shareholder Holding Co Investment in kind (Tender offer method) Division 34.4%+ 30.5%+ 100% 100% 100% 100% Asset Financial Ritz Meritz F&M Securities Business Holding Management Information Partners Service Company Spin offs : After the split, distributing holding company s shares proportionally to existing shareholders. ex) For 1 share = Split to Meritz F&M Holding : Participation of regular shareholder s in tender offer : Acquisition of Meritz Securities transferred cash assets transferred

26 Transition method 25 (2) Split assets breakdown Transferring subjects Subjects Before the division Meritz F&M Holding company After the division Remarks [Assets] 7, , Cash and Deposits Securities Intangible Assets Funds will be used to operate holding company and system construction F&M Treasury(83.3), Securitie s(174.3), Asset management(12.0), Financial Information(2.9), Ritz Partners(15.1), MBS(0.9) (5 subsidiaries stock price) Brand Trademark [Liabilities] 6, , Noncurrent liabilities 10.8 Deferred tax for previous securities and provision for retirement benefits [Total Equity] Note) The numbers are estimated based on the division date and might vary depending on the financial status at the time of division

27 Transition Effect 26 (1) Advantage in entering new biz in aspect of capital finance and investment capacity Investment affordability of KRW 370 bn by reinstatement of Meritz Fire s investment capacity and capital finance of holding company. Advantage in aspect of capital raising in the case of entering into new business through joint venture Group investment capacity Direct Investment and J. Venture KRW 180 bn % KRW 370 bn 70 Holding s 150 Securities Entering into New Biz Fire Domestic Credit Holdings Securities Domestic Credit Annuity Online ins. Saving Bank Domestic Credit Fire J/V J/V J/V Before After New biz

28 Transition Effect (2) Opportunity to expand new biz according to the ease regulation for Ins. Holdings As Ins. Holdings allowed to have nonfinancial company, there are opportunities to enter into nonfinancial business for new business or to establish nonfinancial company for providing customer services in Group 27 Subsidiary Insurance Company (O) (O) 30%(50%) (X) (O) Insurance Holdings (O) Financial company (O) 20%(40%) Non financial company 30%(50%) 30%(50%) 20%(40%) 20%(40%) Exc. Bank, ins. Financial C. N.Financial C. Financial C. N.Financial C. Financial C. N.Financial C. Granddaughter savings, Investment Exc. Bank, other ins. com., securities Incl. relevant Exc. approved company company with (O) (X) by insurance Act. (O) (O) (X) (O) financing business (X) (O) Great Grand daughter 100% Exc. Bank, other ins. 30%(50%) (O) 100% 100% 100% 100% Financial C. N.Financial C. Financial C. N.Financial C. Financial C. N.Financial C. Financial C. N.Financial C. Exc. Bank, ins. savings, Investment com., securities Incl. relevant company with financing business (X) (O) Incl. relevant company with financing business %listed company, (%)unlisted company minimum requirement for retention shares (particular rules for ins. Holdings dominance on subsidiary company (the regulation for Financial holding company 25))

29 Transition Effect 28 (3) FY2010 ~ FY2012 Expected Synergy effect With financial holding company law, sharing customer database among affiliates that would allow to manage customers and develop strategy to target different type of customers would produce various values Under the holding company system, crosssales to individual or corporate customers are allowed and expansion of its strategy by directing of holding company will product synergy Customers, Products, and Geographic divisions (horizontally) can be distinguished and managed by Existing affiliates (Vertically), hence generating synergy through trimming down of overlapping resources and business professionalism (Unit: KRW bn) Synergy Aspect FY2010 FY2011 FY2012 Total Profit Customer information share Marketing Synergy by company Common(2.7bn,11.7%) Cost Resource redundancy F&M (10.4 bn, 45.2%) Securities (9.9 bn, 43.0%) Total

30 Key indicators before and after the split 29 Maintain stabilized capital adequacy and high ROE and BPS capital adequacy Category the time of split Before after KGAAP (KIFRS) (KIFRS) (KIFRS) Solvency ratio 260.6% 264.9% 187.3% 181.1% RBC 292.3% 287.1% 210.5% 201.2% 216.4% % * IFRS will be applied starting in Apr 1 st 2011: RBC after ROE * Meritz F&M ROE : Adj ROE F&M (3Q.FY2010) Meritz F&M FY2010 Holdings F&M + Holdings Meritz F&M FY2011 Holdings F&M + Holdings Meritz F&M FY2012 Holdings F&M + Holdings 16.1% 21.4% 0.2% 14.9% 25.9% 23.7% 25.1% 23.4% 19.9% 22.0% BPS (Unit: Won) F&M (3Q.FY2010) Meritz F&M FY2010 Holdings F&M + Holdings Meritz F&M FY2011 Holdings F&M + Holdings Meritz F&M FY2012 Holdings F&M + Holdings 7,757 8,899 8,683 8,835 11,579 12,228 11,830 14,472 14,028 14,300

31 [Reference] Meritz F&M Financial Statements 30 Estimated P/L Estimated B/S (Unit: KRW Bn) FY2010 FY2011 FY2012 Earned premium 3, , ,566.0 Premium income 3, , ,990.3 Premium paid Unearned premium brought forward Unearned premium carried forward Incurred losses 1, , ,385.3 Refund of LT insurance policy ,022.3 Net operation expenses ,143.8 Increase in premium reserve for LT savingstype ,041.4 Net increase in policyholders dividend reserve Increase in catastrophe reserve U/W profit Net investment profit Total operating profit Nonoperating profit Net profit before tax Tax Net profit (Unit: KRW Bn) FY2010 FY2011 FY2012 Investment assets 5, , ,826.1 Real Estate Others 4, , ,081.2 Noninvestment assets 1, , ,150.9 Outstanding receivables Deposit Unamortization of deferred Acquisition cost Others 1, , , Special account assets Total Assets 7, , ,110.5 policy reserve 5, , ,190.2 catastrophe reserve other liabilities Special account liabilities Total liabilities 6, , ,024.2 Capital Capital Surplus Other capital Total Equity ,086.3

32 [Reference] Holdings Financial Statements 31 Estimated P/L (Unit: KRW Bn) FY2010 FY2011 FY2012 Operating income Equitymethod income Interest income Earnings in Brandusage Operating expense Equitymethod loss Interest expense Management cost Total operating Profit Profit before tax Income tax (*) Net income Estimated B/S (Unit: KRW Bn) FY2010 FY2011 FY2012 Cash and deposit Securities Tangible assets Intangible assets Other noncurrent assets (deposits) Total assets Loan Payable Other liabilities Total liabilities Capital stocks Capital surplus Capital adjustments other comprehensive income accumulated Retained earnings Total shareholder s equity

33 Transition Schedule 32 Important dates Board resolution for division: Dec 1st 2010/ Shareholders meeting for division: Jan 11 th 2011 Division : March 25th / Trading suspension : ~ 4. 8 Meritz F&M change listing : / Holdings listing : End of April 2011 Main Task Yr/Month st Step May~Aug 1. Preparation for division 2. Board resolution of financial holding company 3. Financial holding s preliminary application and approval ( ) ( ) 5. Board resolution for division 2 nd Step 6. Shareholders meeting for division Oct~Mar 7. Apply and approval of financial holdings 8. Division Holdings 3 rd Step 9. Request relisting of holding company/ipo 4 th Step May~June 10. Board resolution for tender offer and new shares issued 11. Proceed tender offer

34 Contents About Meritz F&M 2 3Q.FY2010 Financial Results 3 Meritz Financial Group Transition Appendix 3Q.FY2010 Financial Results FY2009 Embedded Value

35 % 816.9% 21.0% 3.5% 19.9% 10.3% 5.5% 100.0% 2.3% 66.7% 2.2% 68.9% 20.3% 8.4% Mix 2, , , Q. FY % 2, % 2, % 100.0% 3,288.0 Total 30.4% % % 0.7% 22.3 Onetime pymt 26.6% 1, % 1, % 65.8% 2,163.1 Recurring 18.7% % % 2.7% 88.9 New 26.2% 1, % 1, % 68.5% 2,252.0 Longterm 2.1% % % 21.0% Auto 8.0% % % 9.8% Commercial Mix FY2007 FY2008 FY2009 (KRW Bn) 0.0%p 6.0%p 0.1%p 0.6%p 0.1%p 0.1%p 1.0%p 3Q FY % 10.4% 9.1% 8.1% 9.0% 6.4% 7.1% 0.9%p 9.8% 0.4%p 9.4% 0.5%p 8.9% New 0.1%p 8.1% 0.2%p 8.3% 0.1%p 8.2% Total 1.3%p 5.8% 0.2%p 6.0% 3.1%p 9.1% Onetime pymt 0.4%p 9.0% 0.2%p 9.2% 0.1%p 9.1% Recurring 0.4%p 9.0% 0.2%p 9.2% 0.1%p 9.1% Longterm 0.6%p 6.4% 0.2%p 6.6% 0.4%p 6.2% Auto 0.2%p 8.7% 0.3%p 8.4% 0.6%p 7.8% Commercial FY2007 FY2008 FY2009 M / S Appendix : Sales

36 Appendix : Loss Ratio 35 (KRW Bn) 3Q. FY2010 FY2009 FY2008 FY2007 Com mercial Losses Earned prem Loss ratio ( w/o RG) % 99.0% 1.6% 33.3%p % (59.3%) 81.1% 7.0% 151.3%p (1.8%p) % (61.1%) 258.0% 11.6% 131.1%p % 32.5% 17.4% 6.8%p Losses % % % % Auto Earned prem % % % % Loss ratio 80.9% 6.1%p 75.5% 5.6%p 69.9% 4.3%p 74.2% 4.3%p Longterm Losses Earned prem Loss ratio 1, , % 29.4% 24.2% 3.2%p 1, , % 22.1% 24.1% 1.3%p 1, , % 14.2% 19.7% 3.8%p 1, , % 22.2% 25.8% 2.3%p LT risk L/R (w/ IBNR) 87.2% 4.5%p 84.2% 3.6%p 80.6% 3.5%p 77.1% 1.1%p LT risk L/R (w/o IBNR) 84.1% 6.1%p 77.5% 2.2%p 75.3% 2.5%p 72.8% 3.0%p Losses 2, % 2, % 2, % 1, % Total Earned prem 2, % 3, % 2, % 2, % Loss ratio 79.7% 5.3%p 75.4% 7.1%p 82.5% 3.6%p 78.9% 2.2%p

37 Appendix : Expense Ratio 36 (KRW Bn) 3Q. FY2010 FY2009 FY2008 FY2007 Expenses % % % % Wages & benefits % % % % Administrative % % % % Salesrelated % % % % Other expenses % % % % Expenses recovered % % % % Net expenses % % % % Gross premium earned 2, % 3, % 2, % 2, % Expense Ratio 22.6% 2.8%p 24.7% 1.5%p 26.2% 2.3%p 23.9% 0.4%p Admin Expense Ratio 10.7% 0.1%p 11.1% 0.8%p 11.9% 0.6%p 12.5% 0.8%p Sales Expense Ratio 11.9% 2.9%p 13.6% 0.7%p 14.3% 2.9%p 11.4% 0.4%p Combined ratio 102.4% 2.6%p 100.1% 8.6%p 108.7% 5.9%p 102.8% 2.6%p Note) Salesrelated expenses: acquisition cost/collection fees, commissions paid to agencies, acquisition cost, amortization, deferred acquisition cost, etc Other expenses: loss adjustment expenses, coinsurance paid, reinsurance commission paid, etc Expenses recovered: claim service fee recovered, R/I commission received, etc

38 Appendix: Longterm product portfolio 37 (KRW Bn) 3Q. FY2010 Mix FY2009 mix FY2008 mix FY2007 mix Protectiontype 1, % 1, % 1, % 1, % Accident 1, % 1, % % % Drivers % % % % Property % % % % Disease % % % % Bundle % % % % Personal annuities % % % % Corporate pension % % Savings % % 2, % % Total 2, % 2, % 1, % 1, % Risk+loading premiums % 1, % % % Savings premiums 1, % 1, % 1, % % 13 th month persistency 82.4% 0.8%p 79.6% 6.0%p 73.6% 5.6%p 79.2% 2.8%p 25 th month persistency 60.6% 3.1%p 57.5% 5.3%p 62.8% 1.2%p 64.0% 0.7%p * Including onetime payment, 3Q.FY2010 Persistency: 6 months Average

39 Appendix: Longterm product portfolio 38 Category 3Q. FY2010 FY2009 FY2008 FY2007 L/R Mix L/R Mix L/R Mix L/R Mix Death coverage 40.3% 22.0% 34.6% 22.4% 33.7% 24.5% 40.6% 26.6% Living benefits 108.1% 60.1% 102.2% 60.1% 101.6% 57.7% 97.2% 54.7% Medical treatment 115.0% 35.4% 108.7% 35.4% 107.1% 31.7% 97.8% 29.2% Daily allowance 112.7% 12.3% 101.1% 12.8% 94.1% 13.5% 91.2% 12.9% Disease 93.1% 8.0% 90.4% 8.0% 98.6% 8.5% 103.4% 8.7% Other 67.3% 4.4% 70.6% 3.9% 90.1% 4.0% 98.5% 3.8% Property/other 57.2% 17.8% 56.5% 17.6% 52.3% 17.8% 52.1% 18.7% Total 84.1% 100.0% 79.1% 100.0% 76.2% 100.0% 73.7% 100.0% * Loss Ratio: As of Gross Premiums Written, excluding IBNR * Death coverage: death/disablement (total disablement, disease death) / Medical treatment: accident treatment, disease treatment Daily allowance: accident daily allowance, disease daily allowance / Disease: cancer, other diseases, CI Other: other accident (fracture/burn, etc), other disease (food poisoning, etc) Property/Other: Driver expenses, liabilities, property loss, fire

40 Appendix : Longterm Funding Cost & ALM 39 LT Funding Cost 3Q. FY2010 FY2009 FY2008 FY2007 Funding Cost 4.18% 4.34% 4.50% 4.81% Fixed 5.26% 5.36% 5.63% 5.95% Variable 4.03% 4.16% 4.23% 4.45% Fixed mix 12.3% 15.3% 19.3% 23.4% Variable mix 87.7% 84.7% 80.7% 76.6% Investment yield 5.7% 5.8% 3.6% 5.6% Spread 1.5%p 1.5%p 0.9%p 0.8%p ALM 3Q. FY2010 FY2009 FY2008 FY2007 Asset Duration Bond Duration Liability Duration Matching ratio 83.9% 81.0% 68.5% 86.5% Note1) Subject : LT/Pension account Note2) RBC Duration : FY2009 Asset 4.34, Liability H.FY2010 Asset 4.86, Liability: Q.FY2010 Asset 4.89, Liability 4.12

41 % 14.4% 17.1% 1.3% 9.6% 11.4% 34.5% 4.1% 2.7% 0.0% 2.7% 4.8% Mix 4.9% 4, , FY % 2.8% 0.2%p 5.1% Investment yield 100.0% 3, % 4, % 18.0% 5,462.5 Investment assets 11.1% % %p 13.0% 6.4% Real estate 11.8% % %p 16.6% 14.5% Loans 1.7% % %p 3.7% 226.4% Other 7.6% % %p 8.8% 7.4% Overseas securities 14.3% % %p 11.2% 16.9% Investment funds 41.7% 1, % 1, %p 33.8% 15.6% 1,847.4 Domestic bonds 3.6% % %p 3.9% 11.4% Equitymethod stakes 2.7% % %p 2.5% 5.8% Availableforsale 0.0% % 0 0.5%p 0.5% 25.7 Trading 2.7% % %p 2.9% 26.1% Equities 5.5% % %p 6.1% 49.9% Cash & equivalents Mix Mix Mix FY2007 FY2008 3Q. FY2010 (KRW Bn) Appendix : Investment Assets Portfolio

42 Appendix: Loan Quality 41 (KRW Bn) 3Q. FY2010 FY2009 FY2008 FY2007 (KRW Bn) 3Q. FY2010 FY2009 FY2008 FY2007 Retail loan Normal Credit Precautionary Secured Substandard Policyholder Doubtful Corporate loan Credit Secured SOC related PF Note 3) Total Note 1) Bad debt Allowance Additional deferred loan income Note 2) Estimated loss Total NPL ratio Provisions Coverage ratio (Provisions /substandard & below) Delinquency ratio Retail Note 1) % % 2.0% 1.19% % % 2.45% 1.02% % % 2.0% 1.7% % % 4.3% 4.8% Net Income Corporate Note 2) 3.06% 4.67% 2.5% 3.2% Note1) Corporate Credit : Including Unsecured private placement bonds Note 2) Mortgage Companies : Private Equitybacked bonds Note 3) Corporate PF : Classify as PF ABCP loan as of Dec 2009 Note1) FSB Standard (including retirement accounts, 30 days Overdue principal and interest, Delinquency on Policyholder loan Note2) JID PF loan 7.4 bn (Kumho Industry), Solyeon PF loan 3.7bn (Sungwon)

43 Appendix : PF loan Debtor Site/Project Constructor Sol Yeon C&D Yongin Complex (Office & apartment) Loan amount SungWon Corporation Doubtful Maturity NPL Remark 100% is reserved in bad debt allowance note1) 42 (Unit: KRW bn) Saenal, Co. Gimpo apartment Shindongah, Precautionary, NamKwang, Chonggu ) fixed 39.6% is reserved in bad debt allowance note2) Jeju Investment & Development, Co. Jeju ICC Anchor resort&hotel Kumho Industrial Precautionary, fixed 32.5%is reserved in bad debt allowance note3) Nmode House, Co. Wonhyoro Complex (Office & apartment) Prime Construction, Dongah Construction Normal PSIB Posco E&C office building POSCO Engineering Normal completed Shin Dong D&I Co. CFirst, Ltd Yang Woo Construction Songdo Global Complex Development, Co. S.L D&C, Ltd Suwon Shin Dong urban development project Chongna Complex (Office & apartment) PF ABL Gimpo apartment Songdo A3 block apartment Chunho Dong Complex (Office & apartment) Samsung C&T Corporation Normal Permit in progress POSCO Engineering Normal Samsung C&T Corporation Normal Lotte Engineering & Construction Normal Samsung C&T Corporation Normal Permit in progress Echo city J 35 pole previous site development proj Taeyoung Cons, KCC Cons Normal Permit in progress Total Note1) Sungwon corp applied for court (March 10.) Note2) shindongah, Namkwang pushing for workout. Chonggu bankrupted (reserved 39.6 bn) Note3) Geumho Industry applied for workout (Dec 09) reserved bn

44 Appendix : P & L 43 (KRW Bn) 3Q. FY2010 FY2009 FY2008 FY2007 Net premium earned 2, % 3, % 2, % % Gross premium written 2, % 3, % 2, % % Net premium written 2, % 3, % 2, % % Incurred losses 2, % % 1, % % Refund of LT insurance polices % % % % Net operating expenses % % % % Incr in premium reserves for LT savings % % % % Net incr in policyholders dividend reserves % % % % Incr in catastrophe reserves % % Underwriting income Investment income % % % % Nonoperating income Ordinary income % % Incurred tax expenses % % Net income % %

45 Appendix : B/S 44 (KRW Bn) 3Q. FY2010 FY2009 FY2008 FY2007 Total assets 7, % 6, % 5, % 4, % Investment assets 5, % 4, % 4, % 3, % Noninvested assets 1, % 1, % 1, % % Total liabilities 6, % 5, % 4, % 4, % Policy reserves 5, % 4, % 4, % 3, % Cat reserves % % % % Other liabilities % % % % Total shareholders equity % % % % Capital stock % % % % Capital surplus % % % % Retained earnings % % % % Capital adjustment % Solvency margin ratio 260.5% 29.6%p 230.9% 41.0%p 189.9% 45.9%p 235.8% 65.4%p Solvency amount 1, % % % % Solvency guidance % % % %

46 Appendix : Embedded Value (FY2009 EV 1,599.1 Bn) 45 Classification (Unit : KRW Bn) FY2009 Growth FY2008 Growth FY2007 Embedded Value 1, % 1, % 1,224.6 Value of Inforce Business % % Profit Margin 8.5% 0.7%p 7.8 % 0.7%p 7.1% Adjusted Net Worth % % Value of 1year New Business % % Profit Margin 7.3% 0.4%p 6.9% 0.2%p 6.7% [Reference] Value of Inforce Business : Economic Assumption Investment yield : 5.1% (Unit : %) FY2009 FY2008 FY2007 Investment Yield Risk Discount Rate : 11.5% [CAPM (Capital Asset Pricing Model)] Inflation Rate : 3.0% Required Capital : Applied 150% of solvency ratio standard Tax : FY2010 ~ FY2011 : 24.2%, After FY2012 : 22.0%)

47 Appendix : Embedded Value (FY2009 EV by Risk Discount Rate ) 46 Unit : KRW Bn Category 10.0% Risk Discount Rate 11.5% 13.0% RBC (RDR 11.5%) Adjusted Net Worth Shareholder s Equity Adjusted Capital Value of Inforce Business PV of future profit 1, Cost of Capital Embedded Value 1, , , ,631.5 Value of 1year New Business PV of future profit Cost of Capital

48 47 Thank you!! Investor Relations Contacts: ,